HomeMy WebLinkAboutAgreement with A-17-005 CalHFA.pdfAgreement No. 17-005
Partkipatioo Agreement
Local Government Special Needs Housing Program
This Participation Agreement ("AgrtU!IffDitj for the Local Government Special Needs
Housing Program ("SNJIP'> or "Progl'flwi') is entered into and effective as of January 10 •
2017, by and between the County of Fresno, a Political Subdivision of the State of California
C'Partidptmf') and the California Housing Finance Agency ("OIIHFA." or ·~IICJ'j (each a
"Party", and collectively the "Part/a').
RECITALS
A . In 2004, the people of the State of California passed Proposition 63, which
established the Mental Health Services Act ("MJISA" or the .. Ad'), as subsequently amended.
The Act creates the Mental Health Services Fund ("MHSF') within the State Treasury for the
purposes of funding programs authorized under the Act.
B. Through a joint effort among the State Department of Mental Health {DMH),
CalHF A, and the County Mental Health Directors Association, the MHSA housing program was
created in 2008 as a limited tenn program to administer Four Hundred Million and NollOOs
Dollars ($400,000,000.00) ofMHSA funds set aside to finance permanent supportive housing for
individuals with mental illness (the "MHSA. Hoablg Progrtmi'). With nearly all of the original
funding expended or committed, no new financing for housing under the MHSA Housing
Program shall be approved after May 30,2016.
C. Safe, affordable, decent and stable housing is a critical element for weUness,
recovery and resiliency for persons with mental illness. The Participant has determined that
funds from the MHSF may be used to provide for such housing for persons qualified for services
under the Act.
D. CaiHF A is the state's affordable housing bank, with expertise in developing and
administering real estate lending programs and products benefiting persons of low and moderate
income. CalHF A is authorized to enter into contracts to create and administer housing and real
estate lending programs for the benefit of other governmental entities in the State of California.
E. This purpose of this Program is to provide an option, subsequent to termination of
approvals of new financing under the MHSA Housing Program, for Participants to continue
partnering with CaiHF A in the development of supportive housing for MHSA-cligible persons,
and to more fully utilize MHSA funds for housing purposes.
F. The Participant and CaiHF A enter into this Agreement for the purpose of
authorizing Participant to provide funding to Cai.HFA to provide housing development expertise
and real estate lending services to the Participant for the construction, rehabilitation, and/or
development of housing for persons qualifying for mental health services under the Act
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AGREEMENT
1. Definitions.
"Act" is defined in Recital A.
"Agreement" means this Participation Agreement
"Application" means a Local Government Special Needs Housing Program Application submitted
to Call-IF A by the Participant and Developer( s ).
"Application Fee" is defined in Section 4.6.2.
"Area Median Income" ("AMI") means the median gross income of the area in which the
Development is located as determined by the Secretary of the Treasury of the United States for the
purposes of Section 42 ofthe Internal Revenue Code of 1986, adjusted for family size in accordance
with 26 USC 42(g)(2)(c)(ii).
"Assignment Agreement" is defined in Section 4.1.
"Borrower" means the party, or parties, to whom a Loan is made under this Program.
"CaiHFA" means the California Housing Finance Agency, a public instrumentality and political
subdivision ofthe State of California.
"Capitalized Operating Subsidy Reserve ("COSR")" means a capitalized operating subsidy
reserve held by CalHF A to cover deficits in operating expenses attributable to a portion or all of the
COSR Regulated Units. The COSR will be subject to the terms of a Capitalized Operating Subsidy
Reserve Agreement between the Borrower and Call-IF A.
"Certificate of Occupancy" means a certificate, or equivalent, issued by a local building
department to the Borrower that indicates that the Development has met all local code requirements
and is ready for occupancy.
"Concept Meeting" is defined in Section 5.1.7.
"COSR" is defined in Section 2.8.
"COSRA" or "COSR Agreement" means the agreement between the Borrower and Call-IF A
governing the COSR.
"COSR-Assisted Unit" is defined in Section 2.8.
"COSR Servicing Fee" is defined in Section 4.6.5.
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"CTCAC" means the California Tax Credit Allocation Committee, which approves the
competitive allocation of state and federal tax credits to eligible developments.
"Developer" means the party selected by a Participant to acquire and renovate or build rental
housing that includes rental units reserved for Eligible Clients.
"Development" means a housing development for which funds are provided under this Program.
"Development Proposal" means a financial proposal by a Developer to renovate or construct a
rental or shared housing development that will include units reserved for occupancy by Eligible
Clients. A Development Proposal includes the site location and environmental concerns, a
summary of the proposed unit mix, rents , any income limits, the proposed sources and uses of funds
needed to build the Development, operating expense and vacancy projections, and a thirty (30) year
cash flow analysis of the Development following issuance of a Certificate of Occupancy.
"Eligible Clients" means a person (including Veterans) who is Homeless or at Risk of
Homelessness and who has a mental illness in accordance with California Welfare & Institutions
Code Section 5600 .3(a) and/or California Welfare & Institutions Code Section 5600.3(b).
"Eligible Development" means a Development eligible for financing under this Program, as
described in Section 2.5.
"Final Commitment Letter" means a letter issued by CalHF A to memorialize the terms and
conditions relating to the use of Program Funds and conditions relating to a proposed
Development and units reserved for Eligible Clients, including: (a) the terms and conditions of
the Loan and COSR approval; (b) any reserve requirements; (c) the required Loan lien pr iority;
and (d) any special conditions related to the Development financing or scope of rehabilitation or
construction.
"Financial Analysis" means the comparison ofthe Development's anticipated sources of funds
to the anticipated development costs, and an income and expense analysis based on proposed
rents, utility allowances, vacancy assumptions, rental subsidies, operating expenses, debt service .
This analysis allows CalHF A to determine the projected COSR funding levels needed to
subsidize the MHSA COSR Assisted Units , and any subsidy, operating or replacement reserves
needed to ensure the financial viability of the Development over the first twenty (20) -thirty
(30) years of operations.
"Homeless or at Risk of Homelessness" means living on the streets or lacking a fixed and regular
night-time residence. This includes living in a shelter, motel or other temporary living situation in
which the individual has no tenant rights . "At Risk of Homelessness" may be due to one of the
following situations: (a) transition age youth exiting the child welfare or juvenile justice systems;
(b) discharge from crisis and transitional residential settings, a hospital, including acute psychiatric
hospitals, psychiatric health facilities, skilled nursing facilities with a certified special treatment
program for the mentally disordered, and mental health rehabilitation centers; (c) release from city
or county jails, but not a parolee from state prison; (d) temporary placement in a residential care
facility upon discharge from (b) or (c) above; and (e) individuals who have been assessed and are
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receiving services from the County Mental Health Department and who have been deemed to be at
imminent risk ofhomelessness, as certified by the County Mental Health Director.
"Loan" means a secured loan financed with Program Funds under the terms of the Program.
"Memorandum of Understanding" or "MOU" means an agreement between the developer, the
primary service provider(s), the property management company, and the Participant to ensure
compliance with the Regulatory Agreement terms and other Development regulatory agreements
that may impose income restrictions or more restrictive rent limits on the Regulated Units. The
property management agent and the primary service provider may be related entities, provided
there is a clear separation of staff and a clear delineation of their separate roles, staffing and
responsibilities in the MOU.
"MHSA Housing Program" is defined in Recital B. The MHSA Housing Program is governed
by an Interagency Agreement solely between CalHF A and the State Department of Health Care
Services ("DHCS'') (the successor to DMH), with continuing obligations of CalHF A and DHCS.
Housing financed under the MHSA Housing Program remains subject to the terms thereof.
"MHSF" is defined in Recital A.
"Participant" means a county, two or more counties acting jointly, or a city receiving funds
pursuant to Welfare and Institutions Code Section 570 1.5, and which is a Party to this
Agreement.
"Participant Funds" means MHSA or other funds transferred from the Participant to CalHF A
for use per the terms of the Program and this Agreement, and may include residual receipt loan
payments received by CalHF A for repayment of MHSA Housing Program loans or SNHP Loans
that the Participant approves for transfer to CalHF A for use per the terms of the Program and this
Agreement.
"Participant's Account" means an account established at CalHFA for the purpose of holding
Participant Funds transferred to CaiHF A under the terms of the Program and this Agreement,
which may include sub-accounts. The Participant's Account includes quarterly interest earnings,
disencumbered COSR funds, and may include residual receipt loan payments authorized by
Participant to be deposited therein.
"Party" and "Parties" are defined in the first paragraph of this Agreement.
"Permanent Loan Conversion" means the conversion of construction loans to permanent
status, and may include payment in full or part of the principal of a construction loan or the
funding of additional loans upon completion of construction. Permanent Loan Conversion may
be subject to additional due diligence requirements.
"Primary Service Provider" means the entity responsible for overall implementation and delivery
of the supportive services to the Eligible Clients as specified in an Eligible Development's
supportive services plan approved by the Participant.
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"Program" or "SNHP" shall mean the Local Government Special Needs Housing Program
administered by CalHF A in accordance with this Agreement.
"Program Funds" shall mean Participant Funds transferred to CalHF A, plus accrued interest , to
be used to finance SNHP Loans or COSR's for Eligible Developments or such other purposes
agreed upon by the Parties.
"Program Participation Fee" or "PPF" is defined in Section 4.5.
"Regulated Unit" means a rent and occupancy-restricted bedroom or unit in a Development
reserved for Eligible Clients under the Program.
"Regulatory Agreement" means a Development-specific regulatory agreement that restricts
occupancy of a specific number of units/bedrooms reserved for Eligible Clients. The Regulatory
Agreement shall: (a) identify the number, size (number of bedrooms), and use or occupancy
restrictions of the Regulated Units; (b) specify the maximum rents for the regulated units; and (c)
be recorded senior to the Loan deed oftrust.
"Rental Housing Development" means an apartment building or buildings with five or more
apartments. Individual apartments or bedrooms within an apartment may be rented to Eligible
Clients as Shared Housing Units. A Rental Housing Development shall not include a Development
which is subject to any State of California licensure requirements.
"Servicing" is defined in Section 6.2.
"Servicing Fee" is defined in Section 4.6.5.
"Shared Housing Development" means a residential building having less than five apartments (a
single family home, duplex, tri-plex or four-plex), with each bedroom rented to an Eligible
Client and is not subject to any State of California licensure requirements. Each bedroom within
a Shared Housing Development is a Regulated Unit and considered a "Shared Housing Unit".
"Shared Housing Unit" means a bedroom that is leased to an Eligible Client living in a Shared
Housing Development or a Rental Housing Development.
"SNHP" or "Program" means the Local Government Special Needs Housing Program
developed and administered by CalHF A in accordance with this Agreement.
"Term Sheet" is defined in Section 2.10
"Underwriting Fee" is defined in ,Section 4.6.3.
"Unif' means: (a) a traditional apartment residence containing at least one (1) bathroom and a
kitchen in the case of Rental Housing Developments; or (b) a separate lockable bedroom in the case
of Shared Housing Developments, with each bedroom being subject to a separate individual rental
agreement.
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2. General Program Description
2.1 Purnose. The purpose of the Program is to allow local government recipients of
MHSA funds to partner with and utilize CalHFA's expertise to jointly provide supportive
housing and housing assistance for Eligible Clients (and their families). This Program is
separate and independent from the MHSA Housing Program. This Program shall not affect the
rights and obligations of any party under the MHSA Housing Program, and the MHSA Housing
Program shall not affect the rights and obligations of any party under this Program.
2.2 Participant's Role. Eligible Participants include local governments that provide
MHSA and/or other funds (collectively, the "Program Funds'~ to CalHFA for the purpose of
providing financial assistance in accordance with this Agreement. Participant shall be
responsible for those items listed in Section 3.1.
2.3 Eligible Use of Program Funds. Program Funds may be used to finance capital
development loans for the development of new permanent supportive rental housing and to
provide operating subsidies for some, or all of the rental housing units reserved for Eligible
Clients. Subject to CalHF A approval, and such conditions deemed necessary or advisable by
CalHF A, Program Funds may also be used to provide financial assistance to housing
developments financed under the MHSA Housing Program.
2.4 Eligible Borrowers. The Borrower must be legally organized as a single-asset
entity, or entity that holds title only to MHSA or SNHP Developments, or as otherwise approved
by Participant.
2.5 Eligible Developments. Eligible Developments include new construction or the
acquisition and rehabilitation of a Rental Housing Development or Shared Housing Development
to provide new permanent supportive housing for Eligible Clients, which may include occupancy
restrictions (including preferences or other restrictions), such as units for seniors, veterans, or
transitional aged youth, as determined by Participant. Master leasing is not permitted.
2.6 Loans
2.6.1 Loans shall be fixed at three percent (3%) simple interest (unless
otherwise approved by Participant), require annual residual receipt payments (in accordance with
the Regulatory Agreement), and have a minimum term of twenty (20) years . Proposed Loans
must be sized based on the recommended Loan Limits reflected on the most current Term Sheet,
unless otherwise approved by Participant.
2.6.2 Accrued interest and principal payments on Loans will be required on an
annual basis, payable from residual receipts (i .e., from fifty percent (50%) of surplus cash after
payment of approved operating expenses) to the extent available and in proportion to other
residual receipts lenders' loan amounts, as more particularly described in the Regulatory
Agreement and Loan documents.
2.6.3 Accrued and unpaid interest and principal shall be due and payable in full
upon maturity of the Loan, except as otherwise approved by Participant.
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2.6.4 The Loan tetm shall be coterminous with the term of the Development's
shortest residual receipts or deferred loan, except as otherwise approved by Participant.
2.6.5 The Loan shall be secured against the fee interest in the property (or
leasehold interest if approved by Participant) in a lien position based on size of the Loan
compared to other residual receipt loans or as otherwise approved by Participant.
2 .6.6 Predevelopment loans are not permitted under the Program. Loan closing
may only occur prior to the start of construction or at Permanent Loan Conversion.
2. 7 Regulated Units. A Regulatory Agreement will be recorded and will restrict the
Development and the Regulated Units.
2.8 Capitalized Operating Subsidy Reserve. The Participant may elect to provide a
capitalized operating subsidy reserve (the "COSR") funded with Program Funds to subsidize the
rents of some or all of the Regulated Units (the "COSR-Assisted Units") by approving a
maximum COSR as part of the Application.
2.8.1 COSR funds shall be held by CalHF A in a Development-specific reserve
account subject to the terms of the COSR Agreement.
2.8.2 Except as otherwise approved by Participant, the rents for COSR-Assisted
Units shall not exceed the greater of: (a) thirty percent (30%) of the current SSI/SSP grant
amount for a single individual living independently (Jess CTCAC utility expenses and other
mandatory fees); or (b) thirty percent (30%) of total household income (Jess CTCAC utility
expense and other mandatory fees), whichever is higher (up to thirty percent (30%) of thirty
percent (30%) of AMI adjusted for family size and determined annually by CTCAC).
2.8.3 CalHF A is responsible for advising the Participant of the continuing need
for the COSR if a Development receives new operating or rental subsidies for the COSR-
Assisted Units. If the COSR is no longer needed, the COSR funds shall be disencumbered and
returned to Participant's Account.
2.9 MHSA Housing Program Development Assistance. As a convenience to
Participants with housing developments financed under the MHSA Housing Program, CalHF A
will permit a Participant to request that Program Funds in Participant's Account be transferred to
and used to provide financial assistance for housing developments financed under the MHSA
Housing Program. The use of Program Funds for such purpose shall be subject to CalHF A
approval and to such conditions deemed necessary or advisable by CalHF A, or as otherwise
required under the MHSA Housing Program.
2.9.1 Requests under this Section 2.9 shall be in written form acceptable to
CaiHF A and signed by an authorized representative of Participant.
2.9.2 Program Funds transferred under this Section 2.9 may be used for any
purpose that benefits the development or the MHSA tenants, including without limitation
providing additional funds for operating subsidy reserves, paying costs and expenses in
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connection with ensuring the continued availability of the MHSA units, and protecting or
preserving the security interest in the MHSA Housing Program development.
2.9.3 Program Funds transferred to or used for MHSA Housing Program
developments shall thereafter be subject to the terms of the MHSA Housing Program.
2.10 Term Sheet. CalHF A shall publish a SNHP Term Sheet (the "Term Slteef') on its
website (www.calhfa.ca.gov) providing details of the Program, including recommended Loan
and COSR limits per Regulated Unit, required Borrower or Developer-paid fees, and reserve
requirements. The Term Sheet is subject to change at CalHF A's discretion; Participants will be
notified of changes. In the event of a conflict between this Agreement and Term Sheet, the
provisions of this Agreement shall control. A Participant may provide its own term sheet to
sponsors or developers detailing supplemental Program terms and conditions.
2.11 Lender. Program Funds being used under this Program are being provided by the
Participant and are being loaned or otherwise used in accordance with the Participant's direction.
All Loan payments, interest, and other income with respect to the Program Funds shall be
deposited in the Participant's Account unless otherwise directed by Participant. Because
CaiHF A shall be underwriting and closing the Loans in accordance with this Agreement, the
Loan documents shall be in the name of CalHF A, solely for ease of administration. CalHF A's
obligations and responsibilities in this regard shall be limited as prescribed herein.
2.12 Collaborative Effort. As a jointly created and administered Program, the Parties
shall continue to work together to address and resolve issues that may arise with respect to the
Program or a particular Development.
3. General Responsibilities of the Parties
The general responsibilities of the Parties concerning the operation and implementation
of the Program are listed below, subject to any specific requirements provided elsewhere in this
Agreement, in statute and/or in regulation.
3.1 Participant Responsibilities. Participant shall be responsible for each of the
following general matters with respect to the Program:
3 .1.1 The interpretation and implementation of the terms of the Act with respect
to matters relating to mental health programs and services contemplated by the Act, including the
definition of persons qualifying for services under the Act, as such may affect the Program.
3.1.2 Determination of the qualification for and delivery of the mental health
and supportive services under the Program and the Eligible Client population.
3.1.3 All agreements, contracts, consents, public notices, and approvals by or
with local agencies, or other entities that may be required by the Act, or otherwise needed to
implement the Program.
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3.1.4 All matters related to Participant Funds (whether from MHSF or another
source) provided to CalHF A for the Program, including approvals that may be required prior to
the transfer of any such monies to the possession and control of CalHF A under the Program, and
all matters relating to accounting, transfer and distribution of such Program Funds.
3.1.5 Determination of the following: (a) maximum SNHP Loan or COSR
amount per Regulated Unit; (b) term of the COSR; (c) unit sizes and bedroom count permitted
for Shared Housing occupancy; (d) lien priority of the Loan documents; (e) Loan interest rate,
term and repayment requirements; and (f) maximum Regulated Unit rents.
3.1.6 All matters relating to Participant approvals and agreements regarding
tenant selection and supportive services to be provided to Eligible Clients residing in Regulated
Units, including supportive services plans, staffing ratios and budget appropriations, monitoring
and implementation of services plans and tenant mental health outcomes reporting as required by
Participant, the State Department of Health Care Services ("DHCS''), the County Behavioral
Health Directors Association ("CBHDA") or any other oversight committee or agency.
3 .1. 7 Executing a Memorandum of Understanding (or such other agreement), as
Participant deems necessary, with the Borrower, property manager, primary service provider,
and providing a copy of such agreement to CalHF A.
3 .1.8 Reporting to CalHF A on matters listed in Section 8 of this Agreement.
3.2 CalHF A Responsibilities. CalHF A shall be responsible for each of the following
general Program matters:
3.2.1 Development of such lending operations and protocols identified in
Section 5.2 or as may be needed to implement the Program, including development of: (a) an
Application; (b) specific Loan and COSR approvals; (c) the issuance of Loan commitments; and
(d) Loan and COSR documentation, including but not limited to escrow instructions, promissory
note, deed oftrust, regulatory agreement, and subordination agreements, as applicable.
3.2.2 Representation of Participant in negotiations with developers, borrowers,
investors, other lenders, local governments, service providers and property management firms;
issuing Loan and COSR commitments; closing Loans, and obtaining title insurance.
3.2.3 Underwriting the Development Proposal, including preparation of a
Financial Analysis to determine the anticipated COSR needed to subsidize the COSR-Assisted
Units for the term requested by Participant.
3.2.4 All matters related to the handling, investment and disbursement of
Program Funds provided to CalHF A.
3.2.5 Reporting to Participant on matters listed in Section 7.
3.2.6 The Servicing responsibilities described in Section 6.2.
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4. Financial Provisions
4.1 Participant shall obtain all consents, approvals or agreements necessary to transfer
Program Funds to CalHF A for purposes of operating the Program. Transfers of such monies
shall be made pursuant to a written assignment agreement (the "Assignment Agreement")
submitted to and accepted by CalHF A.
4.2 Participant's assigned Program Funds shall be transferred to, and deposited with,
CalHF A and held in the Participant's Account.
4.3 All monies transferred to CalHF A shall be considered expended for t heir
intended purpose upon the date of receipt by CalHF A.
4.4 During the term of this Agreement, CalHF A shall have control of, and shall
administer, all Program Funds on behalf ofParticipant. These funds shall be held by CalHFA for
the exclusive purposes of the Program. Program Funds held by CalHF A shall be considered
assets of CaiHF A until such time as transferred to a Development or returned to Participant .
CalHF A shall be responsible for the investment of all Program Funds. Interest earnings upon
such investments shall be added to the Participant's Account for the purposes of the Program.
4.5 Participant shall pay Call-IF A a program participation fee equal to five percent
(5%) of the amount of Program Funds transferred from the Participant to Call-IF A (the "Program
Participation Fee" or "PPF'). The PPF is due and payable upon receipt of Program Funds and
shall be deducted from the Program Funds by Call-IF A upon receipt, prior to deposit of the
balance of the Program Funds into the Participant's Account. Notwithstanding the foregoing,
Participant may transfer funds to Call-IF A from the following sources subject to a reduced fee of
three percent (3%) of the amount transferred: (a) any existing unencumbered funds from
Participant's MHSA Housing Program account, until March 31 , 2017; and (b) any COSR funds
committed, or loan funds committed, to Participant's developments under the MHSA Housing
Program that become disencumbered.
4.6 Developer or Borrower shall pay Project-Related Fees as listed in the Term Sheet,
and as follows:
4.6.1 Participant Application Fee. Participant may, at its option, charge the
Borrower a fee of up to one percent (1%) of the sum of all Program Funds provided to a
Development (the "Participant Application Fee"). Such fee shall be due and payable to
CalHF A at Loan closing and shall be paid from a source other than Program Funds. Upon
receipt by CalHF A, this fee shall be deposited into the Participant's Account and held by
CalHF A for eligible Program purposes, unless otherwise directed by Participant.
4.6.2 SNHP Application Fee. A non-refundable fee payable to CaiHFA in the
amount listed in the Term Sheet (the "Application Fee"). Such fee shall be due and payable with
the submittal of an Application. The Application Fee shall be credited towards the Underwriting
Fee.
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4.6.3 CaiHFA Underwriting Fee. A non-refundable fee payable to CaiHFA at
Loan closing equal to one percent (1%) of the sum of all Program Funds provided to a
Development (the "Underwriting Fee"), less the Application Fee .
4.6.4 Escrow/Closing Fees. CaiHFA may charge reasonable escrow and loan
closing or disbursement administration fees to Borrower through escrow.
4.6.5 Servicing Fee and COSR Servicing Fee. Borrower shall pay CalHF A an
annual servicing fee (the "Servicing Fee") for so long as CalHF A is providing Servicing for a
Development, and Borrower shall pay CalHF A an annual COSR servicing fee (the "COSR
Servicing Fee") for so long as a COSR exists and CalHFA is providing Servicing. For a
Development of five or more rental units the Servicing Fee shall be Seven Thousand Five
Hundred and No/100s Dollars ($7,500.00) and the COSR Servicing Fee shall be Five Thousand
and No/lOOs Dollars ($5,000.00). For a Development of one to four rental units the Servicing
Fee shall be Two Thousand Five Hundred and Noll 00s Dollars ($2,500.00) and the COSR
Servicing Fee shall be Five Thousand and Noll 00s Dollars ($5,000.00). The Servicing Fee and
COSR Servicing Fee may be increased, in CaiHFA's sole discretion, as necessary to cover
CalHF A's costs upon a refinancing, restructuring, or other event requiring changes to the Loan
documents. The Servicing Fee and COSR Servicing Fee shall be described in the Regulatory
Agreement, shall be approved Development operating expenses, and shall be paid in advance
annually from Development income. Failure to pay the Servicing Fee or COSR Servicing Fee
shall be considered an event of default under the Development loan documents.
4.7 Other Costs/Responsibilities
4. 7.1 Participant shall be responsible for and shall pay the cost of any litigation,
action or proceeding relating to: (a) the consistency of the Program with the terms of the Act or
other provision of applicable law; (b) the authority of Participant to implement the Program or
the validity, legality, applicability or interpretation of any regulation or programmatic
requirement of Participant with respect to the Program; (c) the allocation, reallocation,
distribution, return or transfer of Program Funds by Participant in connection with the Program;
(d) the legal challenge concerning the legality of any use or occupancy restriction associated with
the Program or Regulated Units; and (e) any other matters related to the terms or requirements of
the Act as it may affect the Program. Participant shall indemnify, defend and hold harmless
CalHF A, its officers, agents and employees for any and all claims and costs with respect to the
above.
4.7.2 Participant shall be responsible for and shall pay for costs associated with
enforcement of Development Loan documents, and for services outside the scope of this
Agreement, as more fully described in Section 6.1.7. Such costs may be paid from Participant's
Account upon Participant's approval.
4.7.3 CalHF A shall be responsible for and shall pay for costs related to actions
due to CalHF A's gross negligence or willful misconduct in processing Program Loans or COSR.
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4.7.4 If Program Funds in the Participant's Account are insufficient to make
loans or otherwise pay any fees or costs payable therefrom, CalHF A shall have no obligation to
contribute or advance any CalHF A funds to such accounts, nor shall CalHF A be required to take
any action which would have been otherwise required if such funds were available.
5. Relationship of the Parties in the Application and Development Process
5.1 Participant shall be responsible for the following:
5.1.1 Completing a local review process to determine eligible Developments to
receive Program Funds, including: (a) selecting the Developments to receive SNHP Funds ,
which assumes Participant acceptance of the development team (including the developer(s),
property management firm and service provider if other than Participant); (b) approving the
location of the Development; (c) identifying the number and size of Regulated Units (bedroom
count), and any use or occupancy restrictions; (d) identifying the maximum rent; and (e)
selecting the supportive services provider;
5.1.2 Seeking and obtaining all required Program Funds local approvals before
executing and submitting the Application to CalHF A;
5.1.3 Preparing and submitting, jointly with the Borrower, an Application for
CalHFA underwriting to include: (a) the maximum SNHP Loan being offered; (b) the number of
Regulated Units and their maximum rent (not to exceed 30% of 30% AMI); (c) if applicable , the
number of COSR Assisted Units, the maximum COSR funding available, and the maximum
COSR subsidy term for the COSR-Assisted Units; and (d) any use or occupancy restrictions on
the Regulated Units or unit sizes;
5.1.4 Developing and obtaining any required local approvals fo r each
Development's supportive services plan , and annual budget and staffing required to ensure
adequate supportive services are provided to the tenants in Regulated Units for the life of the
Program Loan;
5.1.5 Developing a tenant selection plan for each Development, and ensuring
compliance with all local, state and federal fair housing laws;
5 .1 .6 If desired, requiring Borrower to provide a purchase appraisal or real
estate value analysis for CalHF A review, since the Program imposes no loan-to-value
constraints;
5.1.7 Participating in CalHFA-required concept meetings for each
Development, which shall include, as applicable, the developer(s), property manager, service
provider(s), other lenders, and the investor (the "Concept Meeting"). The Concept Meeting
provides an overview of the Development Proposal, including the Eligible Client supportive
service needs, the experience of the property manager and primary service provider, and
proximity to other resident service needs;
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5.1.8 Reviewing CaiHFA's recommended Loan and COSR amounts for each
Development, and providing written acceptance or alternative amounts;
5.1.9 Prior to occupancy of a Development and release of the first COSR draw
(if applicable), Participant shall provide to CaiHFA the approved supportive services plan ;
5 .1.10 Participant shall be responsible for coordinating with Borrowers and
property managers to ensure adequate numbers of Eligible Clients are referred to Developments
to fill vacancies in a timely manner; and
5.1.11 To ensure the financial success of each Development, Participant shall
ensure that the MOU for each Development identifies which party is responsible for working
with Eligible Clients to assist them in getting qualified for SSI or assists Borrower in locating
alternative subsidies to cover the Eligible Client's minimum required rent payment. Participant
shall provide a copy ofthe MOU to CaiHFA.
5.2 CalHF A Responsibilities
5.2.1 CaiHFA will review complete Applications and recommend and approve
Loans and COSR amounts.
5.2.2 CalHFA will coordinate with Applicants to schedule a Concept Meeting,
which shall typically be held within thirty (30) days of receipt of a complete Application.
5 .2 .3 CaiHF A will underwrite each Development Proposal and recommend to
Participant the maximum Loan and minimum COSR's needed to subsidize all or a portion of the
Regulated Units for a minimum of seventeen (17) years . CaiHFA will also advise the Participant
of any supplemental regulatory provisions or income restrictions imposed by other lenders or
CTCAC that would potentially affect the rents, or impose income restrictions on the Regulated
Units.
5.2.4 Following receipt of Participant's approval of a final Loan amount and
COSR for a Development, CaiHF A will issue an approval that authorizes the encumbrance of
Participant Funds for the Development.
5.2.5 Following CaiHFA approval and the Development's receipt of a CTCAC
allocation (if applicable), CaiHF A will issue a Final Commitment Letter .
5.2.6 Following receipt of the required Loan closing checklist items , as posted
on the CaiHF A website, CaiHF A will close the Loan, release any approved draws and fund the
COSR from the Participant's Account. The COSR funds will be held by CaiHFA in a
Development-specific account along with any Development-specific reserve accounts funded by
the Borrower and held by Ca!HF A.
5.2.7 CaiHF A will monitor the rehabilitation and construction of each
Development, as necessary. Borrower shall be responsible for costs of any reports and
inspections , which shall be paid prior to Loan closing and held by CalHF A.
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5.2.8 CalHF A will participate in the Permanent Loan Conversion and require
Borrower to submit all appropriate documentation.
6. Relationship of the Parties After Completion of Loan Transaction
The Parties shall have the following responsibilities after the completion of the Loan
transaction, which shall be deemed to be the latest of Loan closing, Development completion and
stabilized occupancy, or Permanent Loan Conversion, as applicable.
6.1 Participant Responsibilities
6.1.1 Providing mental health supportive services to the tenants of the Regulated
Units . Participant shall also ensure that each Development has an acceptable supportive services
plan, and that any modifications to the supportive services plan are appropriate to meet the needs
of Eligible Clients and the Development(s);
6.1.2 Approving any modifications or amendments to the supportive services
plan and providing a copy to CalHFA;
6.1.3 Monitoring outcome reporting data collection and compilation, as it deems
necessary in order to meet all local and state MHSA reporting requirements, as applicable, and
providing such information to local and state entities, if required;
6.1.4 Providing financial and other information as requested by CalHF A with
respect to the Program or Development(s);
6.1.5 Coordinating with Borrowers and Development property managers to
ensure adequate numbers of Eligible Clients are referred to Developments to fill vacancies in a
timely manner;
6.1.6 Coordinating with the MOU parties to monitor the Development to ensure
the MOU requirements are met;
6.1. 7 Additional services beyond those specified in Section 6.2, including
without limitation: (a) specific enforcement; (b) judicial or non-judicial foreclosure; (c)
receivership; (d) legal fees; (e) Loan document changes related to a default, or potential default,
under the Loan documents; (f) title insurance claims; and (g) advancement of funds to pay
insurance and taxes (or as otherwise necessary to preserve the security interest in the
Development) shall be the responsibility of Participant, including all associated costs. CaiHF A
will advise Participant with respect to real estate lending issues related to the foregoing. Subject
to a separate agreement between the Parties, CalHF A may agree to assist Participant with the
foregoing. Such costs may be paid from Participant's Account upon Participant's approval; and
6.1.8 Advising CaiHF A of changes, or proposed changes, to: (a) Eligible Client
populations; (b) the number of Regulated Units, and use or occupancy restrictions; (c) the
number of COSR-Assisted Units; (d) the Regulated Unit rents; (e) the Loan documents, such as
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related to a default or potential default under the Loan documents; and (e) other changes to a
Development.
6.2 CaiHF A Responsibilities. CaiHF A shall provide the asset management services
described below ("Servicing") for Participant's SNHP Loans, subject to the Servicing Fee and
COSR Servicing Fee described in Section 4.6.5. The Servicing shall include the following:
6.2.1 Review and approval of the following required Borrower submittals
(which Borrower must also submit to Participant), including: (a) annual SNHP self-certification
Development report(s); (b) evidence of property and liability insurance; (c) Regulated Unit rent
rolls and proposed rent increases; (d) current local Housing Authority utility allowances by unit
size; (e) proposed line item operating budget; (f) evidence of rental subsidies; (g) annual
Development audits showing actual rents and operating costs for the prior year; and (h) COSR
draw requests;
6.2.2 Hold, control and approve disbursements of Development reserve
accounts and COSR, as applicable;
6.2.3 Determine appropriate investment vehicles for the Agency-held Program
Funds and deposit interest earnings into the applicable Participant or Development account;
6.2.4 Perform periodic reviews regarding the adequacy, use, disbursements, and
need for COSR on any given Development, and annually provide the results of such reviews to
Participant. Subject to Participant consent, the COSR may be reduced or eliminated and the
funds reallocated as directed by Participant;
6.2.5 Perform inspections and prepare physical inspection reports biennially or
as deemed necessary by CaiHF A, and provide copies to Participant if requested;
6.2.6 Provide concurrently to Participant and the Borrower any statutory notices
of default under the Loan documents;
6.2.7 Accept SNHP Loan or other payments from a Borrower or Development
and disburse such funds at least annually to Participant. If instructed by Participant in writing,
CalHFA may transfer such payments or other income to Participant's Account, subject to the
Program Participation Fee;
6.2.8 Failure to pay the Servicing Fee or COSR Servicing Fee shall be
considered an event of default under the Development loan documents. If the Borrower fails to
pay the Servicing Fee or COSR Servicing Fee, CalHF A may, at its option: (a) deduct the fees
from any CalHF A-held Development reserve account, and withhold future COSR disbursements
(if applicable) until payment is received; or (b) deduct the fee from the Participant's Account
following Participant notification;
6.2.9 Subject to an additional fee to be paid by Borrower, as necessary to cover
CalHFA's costs as determined by CalHFA, CalHFA may agree to provide certain other
administrative services in connection with the SNHP Loan, such as processing requests for
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approval of Borrower organizational changes, transfers of the Development or other ownership
changes, and substitution of property management firms; and
6.2 .1 0 Subject to a separate agreement between the Parties if deemed necessary
by CalHF A, CalHF A may agree to assist Participant with the services described in Section 6.1. 7,
as well as transactions related to refinancing, restructuring, or other changes to the Loan
documents, Development or Borrower. Costs for such services will not exceed the amount
necessary to cover CalHFA's costs as determined by Ca!HFA and may be paid from
Participant's Account upon Participant's approval.
7. CaiHFA Reporting Requirements
7 .I CalHF A shall keep such books and records of the operation of the Program and
the Developments, pursuant to common accounting principles, practices and state laws.
7.2 CalHFA shall prepare annual reports to Participant that include key results and
funding for the costs associated with Participant Developments. CaiHF A shall provide such
reports to Participant no later than March 31st of each year.
7.3 Commencing in 2017 and each fiscal year thereafter, Ca!HF A shall provide to
Participant an accounting of Program Funds to include: (a) the amount of funds held by CalHFA
at the beginning ofthe reporting term; (b) the amount of new funds received from Participant; (c)
the amount of funds received from Loan repayments or unused COSR deposits to the
Patticipant's Account; (d) the amount of interest earned on Program Funds by date posted; (e)
the amount in the Participant's Account at the end of the reporting term; and (e) a report on the
total amount of committed and uncommitted Participant Funds by Development.
8. Participant Reporting Requirements
8 .1 Participant shall report to CaiHF A by May I 51 of each calendar year the
anticipated amount of new Program Funds that will be assigned to CaiHF A after July I 51 of the
same calendar year for Program purposes during the fiscal year commencing July I st. Transfers
of Program Funds may be made periodically, subject to an Assignment Agreement submitted to
and accepted by CalHF A.
8.2 Participant shall provide all reports and other information to such parties as may
be required under the Act, or as requested by CalHF A from time to time.
9. Return of Program Funds
Participant may request the return of any unencumbered Program Funds remaining in
Participant's Account by providing sixty (60) days written notice to CalHF A.
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10. Miscellaneous
10.1 No Third Partv Beneficiaries. This Agreement is for the exclusive benefit of the
parties hereto and no rights of third party beneficiaries are created herein. This Agreement shall
not benefit or create any implied or expressed rights of any third person or entity, including but
not limited to the California Department of Health Care Services, the Borrower, Development
sponsor, Development owner, service provider, or any tenant or applicant for tenancy of a
Development.
I 0.2 Entirety, Amendments, Construction. This Agreement supersedes any and all other
agreements, oral or in writing, between the parties hereto with respect to the subject matter hereof
and contains all of the covenants and agreements between the parties with respect thereto. Each
Party to this Agreement acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any Party, or anyone acting on behalf of any
Party, which are not embodied or referred to herein, and that no other agreement, statement, or
promise not contained or referred to in this Agreement shall be valid or binding. No amendment or
modification of the provisions of this Agreement shall be valid unless made in writing and signed
by the parties hereto. This Agreement shall not be construed as if it had been prepared by one of
the parties, but rather as if both of the parties had prepared it.
10.3 Survival. The terms, conditions, and warranties contained in the Agreement that
by their sense and context are intended to survive the performance hereof by the parties
hereunder shall so survive the termination of the Agreement, whether by completion of the
performance, cancellation, or otherwise.
10.4 Potential Conflict of Interest. If, in addition to a Loan pursuant to this
Agreement, Ca!HF A provides a separate loan secured by a Development, it may create a
perceived or actual conflict of interest. Participant hereby waives any such conflict of interest
and agrees to execute any additional document as deemed reasonable or necessary by CaiHF A.
By executing this Agreement, Participant and Ca!HF A agree that CalHF A is not assuming any
obligations beyond those required under California law applicable to senior lenders, unless
expressly set forth herein.
11. Termination
11.1 Either Party may terminate this Agreement with or without cause by providing
sixty (60) days written notice to the other Party. However, any Developments with
approved/encumbered SNHP Program Funds shall continue to be processed by Ca!HF A. Upon
termination of this Agreement: (a) Ca!HFA's authority to lend Participant Funds under the
Program shall cease; (b) Ca!HF A shall retain responsibility for the Servicing for Developments
for which it is providing such services, subject to Section 11.2; (c) all
uncommitted/unencumbered Program Funds held by Ca!HFA shall be returned to Participant;
and (d) all future funds received from a Development, including payments, interest earned, and
other income, shall be returned to Participant or transferred in accordance with Participant's
written instructions . Upon termination of this Agreement, Participant's responsibilities under
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Sections 3.1, 4.7.1, and 4.7.2 and any responsibilities with respect to existing Developments shall
remain in full force and effect.
11.2 Termination of Servicing
11.2.1 Participant may terminate Call-IF A as the Servicer for all, but not less than
all , of Participant's Developments under the Program by providing CaiHFA with one hundred
eighty (180) days written notice. Upon such termination, Ca!HFA shall assign and Participant
shall assume all Loans in accordance with Section I 2, and CalHF A shall transfer to Partic ipant
all files and records related to the Developments, after which CalHF A shall have no further
responsibilities and obligations with respect to the Developments.
I 1.2.2 CalHFA may terminate Servicing for one or more of Participant's
Developments under the Program by providing Participant with one hundred and eighty (180)
days written notice if: (a) Participant breaches any provision ofthis Agreement and such breach
is not cured within sixty ( 60) days; (b) Ca!HF A no longer has adequate staff to provide such
services; or (c) Borrower is in default under the SNHP Loan and such default has not been cured
within one hundred and eighty ( 180) days. Upon such termination, Ca!HF A shall assign and
Participant shall assume such Loan(s) in accordance with Section 12, and Ca!HFA shall transfer
to Participant all files and records related to the Development(s), after which CalHF A shall have
no further responsibilities and obligations with respect to the Developments.
12. Assignments ofProgram Loans
In addition to any other assignment provision hereunder, if with respect to a particular
Development Participant does not meet its obligations under the Agreement, or otherwise
breaches the terms ofthis Agreement, CalHFA may assign, and Participant agrees to assume, the
Loan and all related Development loan documents and associated responsibilities and obligations
(including the Servicing). Upon any assignment of a Loan under this Agreement, CalHF A's
responsibilities and obligations with respect to such Loan and Development shall cease. The
Parties agree to take such steps as necessary to effect such assignment.
13. Notice
Any notice, tender, or delivery to be given hereunder by either Party to the other may be
effected by personal delivery, in writing, by facsimile transmission, by e-mail or by mail, postage
prepaid, and shall be deemed communicated as of the date of actual receipt. Mailed notices shall be
addressed as set forth below, but each Party may change its address by written notice in accordance
with this paragraph .
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Participant Contact Information
Director
Department of Behavioral Health
Fi:esno County
3133 N. Milbrook Avenue
Fresno, California 93703
CalHF A Contact Information
l:Iousing Finahce Chief-Multifamily Programs
California Housing Finance Agency
500 Capitol Mall, .Suite 1400
Sacraqi.ento, CaUfomia 95814
With copy to:
General Counsel
California Housing Fipance Agency
50d Capital MaJI, Suite, 1400, MS 1440
Sacramento, California 95814
WHEREFORE, the parties hereto ·have executed this: Agreement as of the date set forth above,
and by their signatures acknowledge their understanding of and agreement to all of its
provisions.
Participant
COUNTY OF FRESNO, a·Political
Subdivision of the State of California
l~~ By: ____________ ~
Chairman, Board of Supervisors
By: ~~sb0;01 ~
Bernice Seidel~ Clerk
Board ofSupervisors
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CalHFA
CALIFORNIA HOUSING FINANCE
AGENCY, a public instr.'Urnentality and
political subdivisi_on of the State of
c~~mm · 11r~
By, ~ . D , .
N_ame: &eelfti'le Dlreeter
Title: CalifeFAia He1:1siRO AAanee Afje11ey
Local Govemi1lent Special Needs Housing Program--Participation A~ment
County of Fresno
12/0ll2016.#2801S7v2;JBS/jlid
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APPROVED AS TO LEGAL FORM:
DANIEL C. CEDERBORG, COUNTY COUNSEL
APPROVED AS TO ACCOUNTING FORM:
OSCAR J. GARCIA, C.P.A., AUDITOR-CONTROLLER/
TREASURER-TAX COLLECTOR
REVIEWED AND RECOMMENDED FOR APPROVAL:
By ~~7Jjedrtf-
Dawan Utecht, Director
Department of Behavioral Health
-20 -COUNTY OF FRESNO
Fresno, CA
ATTACHMENT A
MHSA HOUSING LOAN PROGRAM
ONGOING ANNUAL MHSA FUND RELEASE AUTHOR IZATION FOR FUTURE
UNEUNCUMBEREDFUNDS
City/county: Fresno County
Until otherwise directed by City/County, and pursuant to Welfare and Institutions Code
(W&I) Section 5892 .5, City/County hereby request the annual release of MHSA funds in
City/County 's CaiHFA MHSA account ("Account"). Said Account may include depos its of
unencumbered MHSA Hous ing funds , MHSA res idual rece ipt loan payments , and accrued
interest (collectively referred to as "Funds "). As of May 151 of each calendar year, please:
0 Release and return all Funds to the City/County; OR
iii Release and assign all Funds to the CaiHFA administered Local
Government Special Needs Housing Program.
On behalf of the City/County listed above , I hereby certify the following :
The City/County will use any released MHSA Funds returned to the C ity/County to provide
housing assistance to the target populations identified in W&l Sect ion 5600.3 . Hous ing
assistance means rental assistance or capitalized operating subs id ies ; security depos its,
utility deposits, or other move-i n cost assistance ; utility payments ; moving cost ass istance ;
and capital funding to build or rehabilitate hous ing for homeless , mentally ill persons o r
mentally ill persons who are at risk of being homeless ; and
The City/County will administer released and returned MHSA Funds in compli ance w ith the
requirements of the MHSA includ ing , but not li mited to , the fo ll owing :
• The City/County will follow the sta keholder pro cess identified in (W&I Section 5848),
when determining the use of the funds ;
• The City/County will include the use of the funds in the County 's Three-Yea r Program
and Expenditure Plan or Annual Update , (W&I Section 5847);
• The City/County will account for the expenditure of those MHSA Funds in the
City/County 's Annual Revenue and Expenditure Report (W&I Section 5899) Reporting
will begin in the fiscal year when the MHSA Housing Program funds are returned to the
City/County by CaiHFA; and
• The C ity/County will expend the returned funds within three years of rece ipt or the funds
will be subject to reversion . (W&I Section 5892 (h)).
By : -~-~j.__ ___ _
Name : _B_r_ia_n_P_a_c_h_e_c_o _____ _
ATIEST:
BERNIC E E. SEIDEL, Cle rk
Board of Supervisors
By ~~~ DePUtY
Date : :fQ..JnUQ.MA \0 1 d-.01(
<}
Title : Chairman
ATTACHMENT A
MHSA HOUSING LOAN PROGRAM
ONGOING ANNUAL MHSA FUND RELEASE AUTHORIZATION FOR FUTURE
UNEUNCUMBEREDFUNDS
Make check payable to (if applicable):-----------------
Address:
Must attach evidence of City/County Board of Supervisors Approval
-----------------------------------------------------
State of California Use Only:
REVIEWED BY:
Department of Health Care Services
Agency
Signature Date
Name
Title
California Housing Finance
Signature Date
Name
Title
2
ATTACHMENT B
MHSA HOUSING LOAN PROGRAM
FUND RELEASE AUTHORIZATION FOR EXISTING UNENCUMBERED FUNDS
City/County: Fresno County
Pursuant to Welfare and Institutions Code (W&I) Section 5892.5, City/County hereby
request the release of Program unencumbered funds on deposit with CaiHFA as of
May 31, 2016, ("Funds") as follows:
D Release and transfer the percent of Funds reflected on Attachment C to
the designated MHSA Project COSR's administered by CaiHFA;
AND/OR
D Release and return $ ______ or the balance of Funds to the
City/County; AND/OR
1!!!1 Release and assign the balance of Funds to the CaiHFA administered
Local Government Special Needs Housing Program ("SNHP").
On behalf of the City/County listed above, I, hereby certify the following:
The City/County will use any released Funds returned to the City/County to provide
housing assistance to the target populations identified in W&l Section 5600.3. Housing
assistance means rental assistance or capitalized operating subsidies; security
deposits, utility deposits, or other move-in cost assistance; utility payments; moving cost
assistance; and capital funding to build or rehabilitate housing for homeless, mentally ill
persons or mentally ill persons who are at risk of being homeless ..
The City/County will administer released and returned MHSA Funds in compliance with
the requirements of the MHSA including, but not limited to, the following:
• The City/County will follow the stakeholder process identified in W&l Section 5848,
when determining the use of the funds;
• The City/County will include the use of the funds in the County's Three-Year
Program and Expenditure Plan or Annual Update, per W&l Section 5847;
• The City/County will account for the expenditure of those MHSA Funds in the
City/County's Annual Revenue and Expenditure Report (W&I Section 5899).
Reporting will begin in the fiscal year when the MHSA Housing Program funds are
returned to the City/County by CaiHFA; and
• The City/County will expend funds within three years of receipt or the funds will be
subject to reversion (W&I Section 5892 (h).).
1
ATTACHMENT B
MHSA HOUSING LOAN PROGRAM
FUND RELEASE AUTHORIZATION FOR EXISTING UNENCUMBERED FUNDS
By : ----------------------------
Name : Brian Pacheco
Date : ~\O ~d-.017
Title : Chairman
Make check payable to (if applicable):-----------------------------
Address :
ATIEST:
B ERN IC E E. S EIDEL, C lerk
Board of Supervi sors
By S .u&P>YYV ~~
Deputy
Must attach evidence of City/County Board of Supervisors Approval
Must attach Summary of Projects and COSR deposits (if applicable)
(Attachment C)
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State of California Use Only:
REVIEWED BY:
Department of Health Care Services
Agency
Signature Date
Name
Title
California Housing Finance
Signature Date
Name
Title
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